Credit cards are offering another sign that the economy is recovering. During March, data suggest that consumers have fewer card defaults and late payments. Delinquencies and charge-offs are at their lowest levels since 2008. Delinquencies are financial obligations that are more than 30 days overdue.
March is a notorious month for late bills because of the holiday season. Delinquency rates tend to fluctuate between quarters, rising in the first and third quarters and falling in the second and fourth.
Capital One and Discover saw the biggest drops in delinquency rates. Bank of America has the highest delinquency rate, at 4.8%, according to The Associated Press. American Express, whose clients tend to be more affluent, had the lowest rate of 1.8%. Bank of America and Discover saw the largest change in charge-off rates.
According to the Federal Reserve, charge-off rates fell to 7.7% of balances in the fourth quarter of 2010 after hitting a high of 10.9% two quarters earlier.
The falling default rates are a sign of economic recovery, but they are also a result of fewer credit cards for people with bad credit. After suffering major blows during the credit crisis, issuers are targeting their credit card offers to consumers they are more sure will have the ability to pay.
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